What Is the Behaviour Pattern of a Variable Cost

question 38

Multiple Choice

What is the behaviour pattern of a variable cost?

• A) It increases in total as output increases.
• B) It increases per unit as output increases.
• C) It decreases per unit as output increases.
• D) It remains constant in total at all levels of output.

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Definitions:

Earnings per Share

A financial metric calculated by dividing a company's net income by the number of outstanding shares, indicating how much profit a company makes per share of stock.

Fixed Cost Sources

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Financial Risk

The chance of incurring financial losses from an investment or business activity.

Operating Leverage

A measure that shows how revenue growth translates into growth in operating income, highlighting the impact of fixed costs.